March 12, 2015
Mr. Drew J. Breakspear, Commissioner
Office of Financial Regulation
200 East Gaines Street
Room 118, Fletcher Building
Tallahassee, Florida 32399-0370
Dear Commissioner Breakspear:
The Bureau of Auditing (Bureau) performs audits in accordance with section 17.03, Florida
Statutes (F.S.). This statute relates to the Chief Financial Officer’s (CFO) responsibilities to
settle the claims of the state using various methods. The Bureau also audits pursuant to the
requirements of section 215.971, F.S., for grant agreements funded with federal and state
monies. Audits on contractual services agreements are audited pursuant to sections 287.057 and
287.058(1), F.S. The CFO also issues memorandums that provide additional audit requirements.
The Bureau audits contracts and grants to determine whether:
 The agreement clearly establishes the tasks to be performed by the provider (has a clearly
defined scope of work).
 The agreement defines quantifiable, measurable, and verifiable units of deliverables that
must be received and accepted before payment is made.
 The agreement specifies the financial consequences that the agency must apply if the
provider fails to perform in accordance with the contract.
 The agreement contains provisions of §287.058, F.S.
 The manager provided written certification for the receipt of goods and services.
Because many of the deficiencies in agency contract and grant agreements stem from poor
contract management and a lack of effective monitoring, the Bureau visits agencies and reviews
contracts, along with the contract manager’s files. In addition to reviewing the contract
document, the Bureau evaluates the contract management function to determine if the agency is
monitoring the contractor’s performance and validating the actual delivery of goods and services.
FLORIDA DEPARTMENT OF FINANCIAL SERVICES
Christina B. Smith  Director
Division of Accounting and Auditing
200 East Gaines Street  Tallahassee, Florida 32399-0353  Tel. 850-413-5510  Fax. 850-413-5553
Email  christina.smith@myfloridacfo.com
AFFIRMATIVE ACTION  EQUAL OPPORTUNITY EMPLOYER
Commissioner Breakspear
March 12, 2015
Page 2
These audits result in written reports to the agency, with the agency providing a corrective action
plan to address any deficiencies noted during the audit. To date, 26 have been completed and the
results are available on the Bureau website
http://www.myfloridacfo.com/aadir/auditing_activity.htm.
An audit of 10 Office of Financial Regulation (OFR) grants and contracts was performed in
2011, resulting in a contract management deficiency rate of 10%. In response, OFR submitted a
corrective action plan (CAP). Both the 2011 audit report and the OFR’s CAP can be found on
the Bureau’s website.
As a follow-up, we have concluded our audit of selected OFR contracts effective on or after July
1, 2013 through July 1, 2014, and related management activities. Our audit focused on OFR’s
compliance with the CAP and following statutory requirements:

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Contract/grant agreements must contain a clear scope of work.
Contract/grant agreements must contain deliverables that are quantifiable, measurable,
verifiable and directly related to the scope of work.
Contract/grant agreements must contain financial consequences that an agency must
apply if the provider fails to perform in accordance with the agreement.
Contract/grant agreements contain all other provisions of §287.057 and §215.971, F.S.
Contract/grant managers must complete training as required by statute.
Contract/grant managers must enforce performance of the agreement terms and
conditions; review and document all deliverables for which payment is requested by
service providers; and provide written certification of the receipt of goods and services by
OFR.
A total of four (4) agreements were selected for audit. Of those selected, the agreement with
Veritec Solutions was reviewed to determine if it contained all the required contract provisions.
There were no deficiencies identified.
Additionally, the contract management files for all four (4) agreements were reviewed for
management activities which resulted in a contract management deficiency rate of 75%. There
are areas where improvements can be made. Attachment A provides a summary of all four (4)
agreements audited.
Commissioner Breakspear
March 12, 2015
Page 3
Contract/Grant Management
Contract and Grant managers must enforce performance of the contract terms and conditions,
review and document all deliverables for which payment is requested and provide written
certification of the Agency’s receipt of goods and services and ensure all payment requests are
certified.
Our audit determined that OFR had contract/grant management deficiencies with three (3)
agreements. Specifically, the following was noted:
 Services provided by Bank of America were not verified against data generated by OFR
prior to certifying invoices for payment. Instead, OFR is comparing vendor-generated
data with vendor-generated data to determine if services have been received as stated on
the invoice. The verification process should include reconciling vendor-generated data to
the OFR’s monthly application data which is controlled and maintained by OFR.
 OFR did not document their review of services provided by KPMG, LLP prior to
certifying payment as required by CFO Memorandum No. 6(2011-2012). KPMG, LLP is
to provide expert advisory services for the implementation of OFR’s Check Cashing
Database system by another provider. KPMG was required to report services performed
through the submission of reports. According to OFR, monthly meetings are held with
the vendor to discuss the reports and verify services performed. However, these meetings
are not documented.
 The agreement with Accenture, LLP required the provider to maintain general liability
and workers compensation insurance throughout the life of the agreement. OFR verified
insurance for the first four (4) months of the term. OFR was unable to provide evidence
that the provider’s insurance coverage during the remainder of the agreement’s term was
verified.
Please provide OFR’s corrective action plan which addresses how these deficiencies will be
corrected for future contracts. This plan should include steps OFR will take to provide a system
of quality control, including training, periodic management review, and feedback to OFR staff
that develop and manage contracts and grants. We request that the plan be submitted within 30
days of receipt of this letter.
Attachment A
Office of Financial Regulation
Agreement Type
Contract/Grant Agreement
State and Federal
Scope of
Financial
Financial
Work/Deliverables Consequences
Assistance
Other
Contract/Grant
Management
Cost Analysis
TOTAL NUMBER
OF AREAS WITH
DEFICIENCIES
NA*
NA*
N
N/A
1
NA*
NA*
NA*
N
NA
1
NA*
NA*
NA*
NA*
N
NA
1
Y
Y
Y
Y
Y
NA
0
NA
NA
NA
NA
3
0
Agreement Number
Service Provider
Contract Amount
OFR-FIN-0022
Bank of America
$84,000
Standard Two Party
Agreement by Statute
NA*
NA*
PO589157
KPMG LLP
$509,948
Purchase Order
NA*
OFR-COM-0011
Accenture LLP
$5,271,388
Standard Two Party
Agreement by Statute
OFR-FIN-0029
Veritec Solutions
$226,500
Standard Two Party
Agreement by Statute
TOTAL NUMBER OF AGREEMENTS WITH DEFICIENCIES
NA* - Contract was reviewed by the Bureau of Auditing prior to this audit